A Glimpse of a Canadian-Led International Order

The U.S. ditched a massive trade agreement—which turned out slightly better without it.

Donald Trump welcomes Justin Trudeau to trade talks at the White House in October (Jonathan Ernst/Reuters)

President Donald Trump did not kill the Trans-Pacific Partnership. Although he withdrew the U.S. from the trade deal in the first week of his presidency, on Tuesday—exactly a year after the American withdrawal—the remaining 11 countries announced that they had completed renegotiating a new TPP without Washington. That sets up a perfect natural experiment about American influence in the world. And, at least as far as this one trade deal is concerned, the results are clear: Even in the absence of U.S. leadership, the world’s democracies will continue to trade and make rules for dealing with one another, but without some of the worst excesses of America’s corporate-influenced foreign policy.

For many of the leading lights of the American foreign-policy establishment, the greatest tragedy of the Trump administration’s posture abroad is that it undermines the liberal international order the United States has been instrumental in building since World War II. Richard Haass, the president of the Council on Foreign Relations, warns that under the Trump administration, “the United States is no longer taking the lead in maintaining alliances, or in building regional and global institutions that set the rules for how international relations are conducted.” The decision to walk away from TPP—an Asian-focused trade deal originally meant to include countries representing 40 percent of the global economy—is central to that assessment, which is shared widely among foreign-policy experts in both parties.

Over the years since negotiations started in the mid-2000s, TPP became a strategic fetish for the American foreign-policy community, because it was seen as essential to countering China’s growing economic influence. In 2015, Secretary of Defense Ash Carter said it was a critical part of the Obama administration’s efforts to reorient America’s global commitments away from Europe and the Middle East and toward Asia. “In terms of our rebalance in the broadest sense, passing TPP is as important to me as another aircraft carrier,” he said. According to that view, what mattered most about TPP was that it would entrench a set of instructions about how commerce was done that would force China to play by America’s rules, not vice versa. Even though China was never a part of the TPP talks, the deal was so big, and included so many of China’s neighbors, that Beijing would have to pay attention. By walking away from the deal, the U.S. ceded influence over that international order to China. “TPP without USA,” tweeted former U.S. Treasury Secretary and Obama economic official Larry Summers, “Strategic gift to China.”

If what matters is getting ahead in the geopolitical rivalry with China, does that contest really live or die by details like intellectual-property regulations? There was a lot not to like in the deal, particularly on intellectual property, and the renegotiation of the TPP shows how many of the problematic positions were coming from the U.S. Now, as the negotiated deal moves forward, some of its most vocal critics have backed off.

“We’re not going to be campaigning in the streets on this like we were before,” said Jeremy Malcolm, an intellectual-property lawyer who works for the Electronic Frontier Foundation, in a phone interview. The EFF, a nonprofit that focuses on rights in the digital era, had sounded the alarm about intellectual-property provisions in the original TPP. The deal would have required other countries to adopt American-style intellectual-property provisions, which tend to be much stricter than in other parts of the world. Among other concerns for the EFF, TPP would have extended by decades the length of time authors can copyright their works, limiting what goes into the public domain. Tightened rules around who can access trade secrets would also have been “seriously dangerous for journalists and whistleblowers,” Malcolm said.

Arguably the most controversial intellectual-property provisions concerned medicines. The U.S. pharmaceutical industry argues that its members need strong patents in order to recoup the huge investments required to invent new drugs. That patent regime is one of the reasons health care is so expensive in the U.S., and the pharmaceutical industry has for years pushed hard to export the American system to other countries. That would benefit an important American industry, but its consequences for developing countries where only a few can afford expensive medications are more mixed. “The TPP may lock-in American-style IP laws and embed a set of norms in a region where they are ill suited,” wrote the governance scholar Yanbai Andrea Wang in 2015.

The humanitarian nonprofit Doctors Without Borders put it more bluntly. The original TPP “would have extended pharmaceutical company monopolies, kept drug prices high, and prevented people and medical treatment providers from accessing lifesaving medicines by blocking or delaying the availability of price-lowering generic drugs in many countries,” the organization wrote in a statement in November.

The revised TPP—now renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership—includes almost none of those controversial provisions on intellectual property. “The removal of a number of provisions from the CPTPP that are harmful to people’s access to medicines is a major victory,” concluded Doctors Without Borders.

What changed? “Canada took the lead on seeking amendments to the TPP’s deeply problematic intellectual property chapter,” wrote Michael Geist, a Canadian law professor. “The IP chapter largely reflected U.S. demands and with its exit from the TPP, an overhaul that more closely aligns the agreement to international standards was needed.” These issues were included in the deal because major American companies—not just pharma but also the software and entertainment industries—rely on strict intellectual property rules to make money, and their interests set the terms for the American negotiating team. Without America making those demands in exchange for access to its markets, it no longer made economic sense for other countries to accept them, said Malcolm.

“What may be most remarkable—given the U.S.’s absence from the table—is how much of the original deal struck in October 2015 has stuck,” wrote Financial Times trade editor Shawn Donnan. A controversial arrangement whereby companies can sue countries over their domestic laws, known as the investor-state dispute settlement system, remains in a reduced fashion. Labor and environmental protections are largely unchanged. The EFF’s Malcolm pointed to e-commerce provisions that provide only weak privacy protections, among other issues, as still being problematic. But overall, the new deal is so similar to the original that Canadian labor unions are furious that their government is still advancing it, just as labor groups in the U.S. objected under Obama. The non-American architects of global trade, in other words, will come to pretty similar agreements even without the U.S.

The biggest change is that the deal is much smaller. Without the U.S., it covers 14 percent of the global economy, down from 40. That means China will have less incentive to join in, as the deal’s architects had hoped. But membership is open to other countries—South Korea and Indonesia are near-term possibilities, and the U.K. has said it wants in, post-Brexit—which could still sway China’s calculus.

China is certainly eager to put its stamp on the world’s economic rules. Around the time Trump was withdrawing from the original TPP a year ago, Xi Jinping told the elites assembled at Davos that his country was ready to to push globalization forward. That struck a lot of listeners as hypocritical, given China’s authoritarianism and state-run economy. But this week’s renewal of TPP—including plenty of liberalized trade rules minus a few damaging handouts to America’s biggest corporations—is a reminder that America can be plenty hypocritical, too.

“America First” has been the rule in trade negotiations for decades; it’s the foundation of the international order that seemed to be threatened by Trump’s withdrawal from the TPP. Now trade rules are being written without America, and the result seems likely to be smaller but more equitable economic gains for the participants. The new TPP poses to a direct challenge to the defenders of America’s traditional role in the world: just what international order do you want?